MART rolls into the black

After several years of losses, the Montachusett Regional Transit Authority expects to post its second consecutive annual profit in fiscal 2016.

FITCHBURG -- After ending seven of the last 11 fiscal years in the red, Montachusett Regional Transit Authority used a low point in fiscal 2014 as a signal to change its operations and was able to turn its deficit around.

MART, which serves North Central Massachusetts, ended its second fiscal year in a row with a surplus.

A nearly completed audit is expected to show fiscal 2016 as a year in which MART revenue outpaced expenses, repeating the success of fiscal 2015.

Though the goal of a regional transit authority is to break even, ending the year with extra money is always better than ending with not enough.

Until 2015, MART had a track record of the latter, with year-end deficits ranging from $300,000 to $1.6 million.

Expenses and revenue for MART have increased drastically since fiscal 2005, with expenses outpacing revenue in seven of those 11 years.
SENTINEL & ENTERPRISE / ANNA BURGESS

After too many years needing assistance from the state Department of Transportation, MART leadership was able to change things. Asked if 2014 was a turning point, MART Administrator Mohammed Khan responded, "That's exactly it."

MART's expenses and revenue have steadily increased during the past 10 years.

In 2005, the organization spent $58.2 million and took in $57.9 million in revenue. By 2008, those numbers had jumped to $77.2 million in expenses and $76.9 million in revenue, and by 2013, to $106.76 million in expenses and $105.13 million in revenue.

Most of the growth has been due to MART's brokerage services, which are based on a contract with the Executive Office of Health and Human Services that brings eligible health-care consumers to hospitals, doctors or other treatment facilities.

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"Our budget grows every year because the number of people that qualify for transport through brokerage services grows every year," said Bruno Fisher, MART's chief operating officer.

"Our total operation has doubled," said Khan. "The brokerage has gone from $58,000 to $132,000."

It has also had an overall increase in ridership since 2007, though it has fluctuated somewhat.

In 2007, MART had 979,656 riders, not including brokerage services.

Top administrators at MART have seen many salary increases since 2006, including in years where the organization closed the year with a deficit. In 2014, they adopted a new policy to only raise salaries in years with no deficit, so administrators did not receive a raise from fiscal 2014 to fiscal 2015.

That number jumped to 1 million in fiscal 2009, fell to 968,365 in 2010, and peaked at 1.2 million in 2014. Fiscal 2016 saw 1.1 million riders.

Despite this overall expansion of services, MART has had varying levels of deficit at the end of each fiscal year, from 2005 to 2014.

Better years, such as 2008, saw about $300,000 in deficit. After deficits of $1.3 million and $1.24 million in fiscal 2006 and 2007, respectively, these much smaller losses were a welcome change.

"The goal is to have our expenses and revenue even out," Khan said, "but when you're dealing with hundreds of millions of dollars in operation, $100,000 is just a small part of that."

From 2009 through 2011, expenses and revenue were calculated as breakeven, but Khan said this was when it had a different accounting system, which used estimates rather than exact figures.

Since 2011, the state has been "insistent on having an accounting system that is actual figures, not in anticipation," he said.

After that accounting shift, 2012 was another year with about $300,000 deficit -- certainly not ideal, but not terrible.

Then came fiscal 2013 and fiscal 2014.

The organization had seen significant reduction of financial losses since 2007, but in 2013, the loss was larger than ever, at $1.6 million. In 2014, the deficit was $1.5 million.

Khan and Fisher said it's hard to say why these large deficits occurred.

The year 2014 had peak ridership and the highest number of vehicles in operation of the past 10 years, but Khan said it's "hard to find a correlation" between those numbers and the large deficit.

"More people riding doesn't necessarily mean that we're spending more money," he said. "Like a van carries 20 people; so if there are two, three, four people up to 20, we're making money."

"The moment it becomes 23 or 24, we need a second van, and we're losing money," Khan added, "but the revenue we lose because of having more vehicles is significantly low percentage-wise, compared to the total cost."

Khan said the biggest expense, year to year, is the cost of full- and part-time drivers. Pay for mechanics and administrative employees is also a big expense.

Whatever the reason for the large deficits, those two years cost the state transportation department more than $3 million total.

"If anything happens to MART, the state picks up the tab," Khan explained.

In 2013 and 2014, the state Department of Transportation did cover MART's losses, but it also insisted MART look at its financials.

"We began looking into our operational costs, how we can reduce them," said Khan.

MART reduced the number of vehicles in service, from 238 in 2014 to 222 in 2015.

It also cut administrative staff, and in 2015, increased bus fares from $1 to $1.25. The fare increase caused a reduction in ridership but also increased revenue.

Khan said it "takes time to have the same ridership," but he expects it to go back up eventually.

The large deficit in 2014 was also a turning point in terms of regulating salary increases.

Until 2014, MART had a "step increase" pay scale, where a certain number of years at the company would trigger an automatic pay increase.

"Now we have a policy where we pay a cost-of-living increase depending on our financial situation," said Khan. "The salary might be the same from year to year if we do not do good, and if it's a good year it's a 2.5 percent increase."

From 2014 to 2015, they received no salary increase. Last year, fiscal 2016, was the first year they received the 2.5 percent increase.

Khan said numbers for 2016 will be completed next week, but it looks like the trend since the 2014 changes is continuing.

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